Correlation Between ORACLE and Hawkins

Can any of the company-specific risk be diversified away by investing in both ORACLE and Hawkins at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ORACLE and Hawkins into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ORACLE P 65 and Hawkins, you can compare the effects of market volatilities on ORACLE and Hawkins and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ORACLE with a short position of Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of ORACLE and Hawkins.

Diversification Opportunities for ORACLE and Hawkins

-0.4

Correlation Coefficient

ORACLE  Hawkins

Very good diversification

The 3 months correlation between ORACLE and Hawkins is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ORACLE P 65 and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins and ORACLE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ORACLE P 65 are associated (or correlated) with Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of ORACLE i.e., ORACLE and Hawkins go up and down completely randomly.

Pair Corralation between ORACLE and Hawkins

Assuming the 90 days trading horizon ORACLE P 65 is expected to under-perform the Hawkins. But the bond apears to be less risky and, when comparing its historical volatility, ORACLE P 65 is 2.45 times less risky than Hawkins. The bond trades about -0.09 of its potential returns per unit of risk. The Hawkins is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11,677  in Hawkins on September 12, 2024 and sell it today you would earn a total of  1,575  from holding Hawkins or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

ORACLE P 65  vs.  Hawkins

ORACLE P 65

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ORACLE P 65 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ORACLE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hawkins

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hawkins are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting forward-looking signals, Hawkins displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ORACLE and Hawkins

The main advantage of trading using opposite ORACLE and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ORACLE position performs unexpectedly, Hawkins can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hawkins will offset losses from the drop in Hawkins' long position.

The idea behind ORACLE P 65 and Hawkins pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.